Global agency gives AA rating to MCD

Delhiites may not be impressed by the services of Municipal Corporation of Delhi (MCD) but an international agency has given a 'AA' rating to the civic body for the reforms initiated by it in managing its finances and schemes.

Delhiites may not be impressed by the services of Municipal Corporation of Delhi (MCD) but an international agency has given a 'AA' rating to the civic body for the reforms initiated by it in managing its finances and schemes.

'Fitch Ratings', in its latest report, affirmed the National Long-Term Rating of "AA-(ind)" to MCD and said the civic body's outlook was stable.

An 'AA' national rating denotes expectations of very low default risk relative to other issuers or obligations in the same country.

However, it warned the MCD of downgrading the rating if the civic body continues to increase its debt without augmenting its income. It advised the MCD to improve revenue income saying it would provide a "sufficient cushion" to its finances and act as a positive rating trigger.

The agency commended the MCD for earning carbon credits in better management of revenue and capital accounts, increase in tax and non-tax revenues and launching of e-governance project and even said coverage of solid waste services in Delhi is "much better" than in other large cities in India.

It also noted that the quality of roads coverage and other civic infrastructure in Delhi are much better than that of other cities in India.

However, the rating agency was critical of MCD's implementation of JNNURM projects saying Fitch considers that MCD may not be able to execute all the projects identified for investment.

One of the highlights mentioned by the agency was the increase in revenue from the toll tax, which it said would provide a "major income boost" for MCD. While in 2008-09, the MCD got Rs 162.23 crore from toll tax, it rose to Rs 196.02 crore in the next fiscal.